Do see the national CPI ever replacing WPI as India’s headline inflation index?
…There are actually three notions of inflation you can think about. One is inflation as in the quantity theory of money (money supply has a direct, positive relationship with the price level) that inflation is related to the value of the basic transactional base of the economy. This number is critical because it tells you how much you should manage the liquidity situation in the economy. The closest index that comes to this index is the WPI. Then there is the cost of living inflation… captured through a consumer price index. The third is inflation as it measures the contracts and costs, sometimes called the producers price index (PPI). I have long argued that we should go for a basket of indices…If you have a basket released on a common time frame, there will be no need for a headline index in that sense. When you talk about RBI (Reserve Bank of India) policy, you look at one (WPI), when you talk about effect on consumer you look at another (CPI) and when you talk about what is h
